Boyle v. Governor's Veterans Outreach & Assistance Center

• Decision Date: 31 January 1991
• Docket Number: No. 90-3352,90-3352
• Citation: 925 F.2d 71
• Parties: Robert G. BOYLE, Appellant v. The GOVERNOR'S VETERANS OUTREACH & ASSISTANCE CENTER.
• Court: U.S. Court of Appeals — Third Circuit

Page 71

925 F.2d 71

18 Fed.R.Serv.3d 1099

Robert G. BOYLE, Appellant v. The GOVERNOR'S VETERANS OUTREACH & ASSISTANCE CENTER.

No. 90-3352.

United States Court of Appeals Third Circuit.

Argued Nov. 14, 1990.

Decided Jan. 31, 1991.

Joseph S. Hornack (argued), Healey Whitehill, Pittsburgh, Pa., for appellant.

Bernard T. McArdle (argued), Stewart, McCormick, McArdle & Sorice, Greensburg, Pa., for appellee.

Before STAPLETON, HUTCHINSON and ROSENN, Circuit Judges.

OPINION OF THE COURT

ROSENN, Circuit Judge.

Framed against a background of government largesse, this appeal presents a recurring picture of employment discharge allegedly in violation of statutory and constitutional protection. The Governor's Veterans Outreach & Assistance Center (VOAC) is an unincorporated organization funded through the federal Job Training Partnership Act (JTPA), 29 U.S.C. sections 1501 et seq. JTPA requires that VOAC maintain a grievance procedure for participants in its employment program pursuant to 29 U.S.C. section 1554. VOAC employed Robert G. Boyle until his dismissal in August of 1988. Boyle filed a timely request for a hearing regarding his termination. Upon VOAC's denial of his request for hearing, Boyle filed suit in the United States District Court for the Western District of Pennsylvania pursuant to 42 U.S.C. sections 1983 and 1988 and the fifth and fourteenth amendments to the United States Constitution alleging that he was dismissed from his employment without due process.

Following a hearing conducted by a United States Magistrate, the district court adopted the magistrate's recommendation to dismiss the action for lack of federal jurisdiction, holding that VOAC's termination of Boyle's employment did not constitute state action as required by section 1983. Boyle appealed. We vacate the order of dismissal and remand to the district court with directions to enter summary judgment for the defendant.

I.

Boyle's complaint, including a demand for jury trial, was assigned to Magistrate Robert C. Mitchell for pretrial proceedings. The magistrate sua sponte raised the question of federal jurisdiction based on whether or not VOAC was a state actor for purposes of alleged civil rights and constitutional violations. The magistrate scheduled a hearing for this purpose at which two witnesses testified: Boyle and Edward Neminski, director of the North Huntington office of VOAC. At the conclusion of the hearing, Boyle's counsel requested a continuance so that depositions might be taken of employees of the Commonwealth of Pennsylvania Department of Labor and Industry ("Department of Labor") in Harrisburg. The magistrate denied the continuance.

Following the hearing, the magistrate found the following facts: VOAC is an unincorporated association created by the Governor of Pennsylvania under the JTPA for the purpose of providing personal assistance to American veterans. VOAC's federal funding under the JTPA is administered by the Department of Labor, Bureau of Job Training Partnership.

The magistrate noted Boyle's argument that VOAC must be found to be an agent of the State because of the following factors: the Governor performs central planning, supervisory, and administrative functions; VOAC is required to submit audit and financial reports to the Commonwealth; the Commonwealth is committed to providing future financial support to VOAC; and that the JTPA creates a statutory relationship between the federal government, the State, and VOAC.

The magistrate rejected Boyle's contention that these factors rendered VOAC an instrumentality of the State, finding that VOAC's actions in discharging the plaintiff and denying him a hearing could not be attributed to the State because the State neither coerced nor encouraged VOAC's action. The magistrate, relying on Neminski's testimony, found that no state regulation compelled or influenced the discharge, and that the State showed little interest in personnel matters. The magistrate found that VOAC employees were not employees of the Commonwealth and that it did not exercise any degree of control or authority over VOAC or its employees. The magistrate also concluded that VOAC did not receive any state funding.

The magistrate also rejected plaintiff's argument that VOAC was an instrumentality of the State because of a statutorily created relationship with the State. The magistrate found that no such comprehensive statutory relationship existed; rather, federal legislation, the JTPA, "affects VOAC actions." Thus, he concluded that the extent and nature of the overall relationship between the Commonwealth and VOAC was too tenuous to establish state action. The magistrate found that "the only connection with the Commonwealth appears to be the limited action of the Pennsylvania Department of Labor and Industry in transmitting the federal JTPA funds to VOAC."

The plaintiff, in compliance with Fed.R.Civ.P. 72(b), filed written objections to the magistrate's proposed findings and recommendations. Plaintiff alleged that the magistrate erred in failing to find as a fact that the employees of VOAC were required to abide by the Governor's Code of Conduct applicable to state employees; that VOAC maintained satellite offices in buildings owned by the Department of Labor and used furniture which were the Department's property; that the Department of Labor has employee monitoring duties; that Boyle's duties included developing and maintaining working linkages with numerous government organizations; and that he received training from a state officer. Boyle also contended that the magistrate abused its discretion in denying a continuance to permit taking of additional depositions in Harrisburg.

The district court, by order dated May 23, 1990, adopted the magistrate's report and recommendation as the opinion of the court and dismissed the action for lack of subject matter jurisdiction on the basis that VOAC's action in discharging Boyle without a hearing was not attributable to the State.

II.

Although not raised by the parties, the case at bar presents an important threshold question of procedure. The district court dismissed this case for lack of subject matter jurisdiction, holding that suit under 42 U.S.C. Sec. 1983 could not be brought without the required state action. However, the requirement in section 1983 of state action is not a question of jurisdiction, but rather is integral to the determination of the merits of the claim.

Boyle's complaint asserted jurisdiction under 28 U.S.C. Sec. 1331's general grant of federal question jurisdiction and under 28 U.S.C. Sec. 1343(a)(3) & (4)'s grant of civil rights jurisdiction. As we reasoned in Kulick v. Pocono Downs Racing Association, 816 F.2d 895 (3d Cir.1987), once the plaintiff has alleged that the defendant's actions violated requisite federal law, the truth of the facts alleged in the complaint, as well as their legal sufficiency in establishing a section 1983 action, citing Duke Power Co. v. Carolina Environmental Study Group, Inc., 438 U.S. 59, 70-71, 98 S.Ct. 2620, 2628-29, 57 L.Ed.2d 595 (1978); Bell v. Hood, 327 U.S. 678, 682, 66 S.Ct. 773, 776, 90 L.Ed. 939 (1946), is a question on the merits. "Otherwise, the district court could turn an attack on the merits, against which the party has the procedural protections of a full trial including the right to a jury, into an attack on jurisdiction, which a court may resolve at any time without jury...." Pocono Downs, 816 F.2d at 898.

Accordingly, where the motion to dismiss is based on the lack of state action, dismissal is proper only pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a claim and not under Rule 12(b)(1) for lack of jurisdiction. Pocono Downs, 816 F.2d at 897-98. See also, Albert v. Carovano, 824 F.2d 1333, 1338 (2nd Cir.1987) (where motion to dismiss is based solely on the lack of any action by defendants under color of state law, and where claims are neither frivolous nor immaterial, the motion is treated as an attack on the merits pursuant to Rule 12(b)(6)) vacated on other grounds, 851 F.2d 561 (1988) (en banc); Holland/Blue Streak v. Barthelemy, 849 F.2d 987, 988-989 (5th Cir.1988) (same); and Malak v. Associated Physicians, Inc., 784 F.2d 277, 280 (7th Cir.1986) (same).

In the present case, the magistrate raised the matter of state action sua sponte. Although the court did not specify under which subsection of Rule 12 the action was being dismissed, the magistrate discussed the issue in terms of subject matter jurisdiction. This procedural error is significant because of the differing standards for evaluating the evidence under Rule 12(b)(1) and Rule 12(b)(6). Under Rule 12(b)(1), the court is "free to weigh the evidence and satisfy itself as to the existence of its power to hear the case." Mortensen v. First Federal Savings and Loan Assn., 549 F.2d 884, 891 (3rd Cir.1977). In contrast, because a Rule 12(b)(6) motion "results in a determination on the merits at an early stage of plaintiff's case, the plaintiff is afforded the safeguard of having all its allegations taken as true and all inferences favorable to plaintiff will be drawn." Id.; see also Malak, 784 F.2d at 280.

If, as in the instant action, the court considers evidence beyond the pleadings in a Rule 12(b)(6) motion, it must do so in the context of a summary judgment motion. Fed.R.Civ.P. 12(b) provides that in a motion to dismiss for failure to state a claim upon which relief can be granted, if matters outside the pleading are considered, "the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56." See also, Pocono Downs, 816 F.2d at 899; Mortensen, 549 F.2d at 891; Malak, 784 F.2d at 280. This "provides further safeguards for the plaintiff: in addition to having all of plaintiff's allegations taken as true, with all their favorable inferences, the trial court cannot grant a summary judgment unless there is no genuine issue of material fact." Mortensen, 549...